Brew Markets: Markets Shrug Off Fed Investigation & Paramount Launches Proxy War

Podcast: Brew Markets (Morning Brew)
Host: Ann Berry
Date: January 12, 2026

Overview

In this episode, Ann Berry unpacks a high-stakes day on Wall Street shaped by two headline stories: the unprecedented criminal investigation into Fed Chair Jerome Powell, and the intensifying proxy war over Warner Brothers Discovery featuring Paramount and Netflix. The show also covers notable corporate moves in big tech and airline consolidation, revealing how these narratives are influencing market sentiment.

Key Discussion Points

1. DOJ Investigation into Fed Chair Jerome Powell (00:03-08:01)

• Background: The DOJ launched a criminal investigation into Fed Chair Powell, focusing on his Senate testimony defending a costly $2.5B Fed HQ renovation, officially citing issues of transparency and oversight.
• Powell’s Response: Powell pushed back, stating the "true motive" was political retaliation for the Fed's independent interest rate decisions, not the renovation (03:32).
• White House Pressure: President Trump has been vocal, urging rate cuts and expressing desire to fire Powell, pressuring the Fed to conform to his wishes (04:20).
• Market Reaction:
  • Initial uncertainty: US equities opened down.
  • Market stabilized: Two main takeaways:
    1. Market has "normalized" Fed turmoil, expecting Powell to serve out remaining four months ("turmoil has almost been normalized by these markets" — Ann Berry, 05:44).
    2. Markets interpret this as a warning to the next Fed chair.
  • Bonds: Short-dated yields fell (on rate cut hopes), long-dated yields rose (inflation expectations).
• Powell’s Stand:
  • "I have served at the Federal Reserve under four administrations, Republicans and Democrats alike. In every case, I have carried out my duties without political fear or favor..." (07:00)
  • "Public service sometimes requires standing firm in the face of threats." (07:05)
• Analysis: Markets have "shrugged off" the news, pricing in a short-term Powell "lame duck" period.

2. Paramount vs. Netflix: The Warner Brothers Discovery Proxy War (08:01-17:47)

• Overview: Paramount launches a lawsuit and proxy fight, directly challenging the Netflix-Warner deal by trying to rally shareholders to its side (08:01).

What's for Sale (09:01)

• Warner Brothers Discovery is being split for sale as:
  1. Film/TV Studios + HBO + IP (Harry Potter, etc.)
  2. Global Discovery Channels (e.g., CNN, TNT, HGTV)

The Bids

• Paramount:
  • Bidding $30/share (~$108B) for all assets.
  • All-cash, straightforward offer; Warner shareholders "take the cash and go home." (09:57)
• Netflix:
  • Accepted by Warner board.
  • Bids for studios only ($27.75/share, ~78B in cash + stock), spinning off cable to a standalone public company (10:17).
  • Warner shareholders get: Netflix shares, cash, and leftover stock in the cable spin-off—creating complexity and valuation uncertainty.

The Proxy/Lawsuit Drama (11:28)

• Paramount sues Warner Bros. for more information on how it valued the Netflix deal, especially the cable assets.
• Paramount also criticizes Warner’s transparency, noting the massive size difference (Paramount: $14B market cap attempting to buy Warner: $70B) and questions around financing (Ellison family’s involvement and guarantees).
• Notable Quote:
  • "This would be the minnow swallowing the whale." — Ann Berry, (11:58), on Paramount's bid.

Recent Benchmark: Versant Spinoff (14:27)

• Comcast recently spun off cable channels as Versant; stock immediately dropped 25%.
• Casts doubt on high cable valuations and bolsters Paramount's argument for a cash, all-in bid.

Proxy War Escalates (15:31)

• Paramount aims to nominate its own directors ahead of Warner’s shareholder meeting; pushes a bylaw amendment requiring shareholder approval before spinning off the cable unit.
• Paramount builds a website and takes its case directly to shareholders.

Regulatory Wildcard (16:40)

• Trump’s stance is unclear; he’s criticized both Netflix (for progressive content) and Paramount (for CBS coverage).
• Industry chatter: Improved Warner performance in 2025 (hit shows, box office success) means Warner might not need a merger after all.

Market's Bet (17:47)

• Warner stock: Down 1.5% today, but still holds a premium due to deal hopes.
• Netflix and Paramount: Both down over past month, indicating no clear winner from the market’s perspective.
• "Neither bidder looking like a winner... shareholders are really saying, we’d prefer frankly that Paramount did have more of a shot." — Ann Berry (17:47)

3. Airline Merger: Allegiant to Buy Sun Country (19:43-21:22)

• Deal: Allegiant (ticker: ALGT) drops 8% after announcing $1.5B cash & stock buyout of Sun Country. Sun Country jumps 10%.
• Regulatory Question: Is this too much consolidation for regulators? It's a "test" for the administration’s stance.
• Market Bifurcation: Big carriers (Delta, American) chase premium flyers while budget airlines consolidate.

4. Big Tech: Apple/Google Partnership & Meta's New AI Push (21:22-25:20)

Apple & Google Collaborate on AI (21:22-22:54)

• News: Apple will integrate Google’s Gemini AI model into iOS, especially powering a major Siri upgrade.
• Implication: Reinforces Google's market strength, highlights Apple's trust in Gemini.
• "I feel as though Gemini has been picking up a bit of a halo..." — Ann Berry (21:54)
• Market Reaction: Shares of both rose ~0.5%; Google briefly tops $4T market cap.

Meta’s Major New Hire & AI Initiative (23:15-24:26)

• Personnel: Dina Powell McCormick named Meta President & Vice Chair; brings political, financial, and Wall Street gravitas.
  • Ex-Deputy National Security Advisor (Trump), Ex-Goldman Sachs, Board member at Meta.
  • Husband: Sen. Dave McCormick, ex-Bridgewater CEO—ties to government & major hedge funds.
• AI Infrastructure Initiative: Mark Zuckerberg announces ‘Meta Compute’, led by McCormick, will work on infrastructure with govts & sovereign wealth funds.
• "Talk about being plugged in..." — John (24:15)

Notable Quotes & Moments

| Timestamp | Speaker | Quote/Highlight | |-----------|---------|-----------------| | 03:32 | Ann Berry (quoting Powell) | "The threat of criminal charges as a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public..." | | 05:44 | Ann Berry | "Turmoil has almost been normalized by these markets." | | 07:05 | Powell (read by Berry) | "Public service sometimes requires standing firm in the face of threats." | | 09:57 | Ann Berry | "If Paramount's bid were to go through, Warner shareholders just take the cash and they go home." | | 11:58 | Ann Berry | "This would be the minnow swallowing the whale." (on Paramount’s market cap vs. Warner’s) | | 14:37 | Ann Berry/John | Versant (Comcast cable spinoff) dropped 25% in first week—market doubts value of cable bundles. | | 17:47 | Ann Berry | "Neither bidder looking like a winner in terms of their current share price performance relative to the start of 2026." | | 21:54 | Ann Berry | "Gemini has been picking up a bit of a halo." | | 24:15 | John | "Talk about being plugged in. Her husband...is Republican senator...previously the chief executive officer of Ray Dalio's Bridgewater..." |

Important Timestamps

• Fed Investigation & Market Response: 00:03–08:01
• Paramount & Netflix Bidding War for Warner Bros.: 08:01–17:47
• Airline Merger (Allegiant & Sun Country): 19:43–21:22
• Tech Moves (Apple/Google, Meta): 21:22–25:20

Tone & Language

• Analytical, unsensational but dynamic, with an emphasis on market implications and inside-baseball details.
• Ann Berry provides expert contextualization: “Let’s break down what the market is really thinking…”
• Conversation retains Morning Brew’s fresh, approachable style, demystifying Wall Street events.

Takeaways

• Fed’s Independence Faces Real Political Pressure: Unprecedented DOJ action, but markets bet Powell will finish out term.
• Paramount-Warner-Netflix: A Deal with Layers: Lawsuits, proxy fights, and valuation disputes highlight ongoing Hollywood strategic drama; market remains skeptical of both bids.
• Tech Collaborations & Hires Signal Big 2026 Moves: Apple bets on Gemini, Meta recruits a powerhouse connector to steer its AI future.
• Ongoing Regulatory Watch: Airline and media consolidation likely to face tough reviews.
• Market Remains on Unsteady Ground: Despite volatility, risk appetite remains and investors are keeping options open as 2026 unfolds.

This summary delivers all essential points for listeners who missed the episode, spotlighting headline stories, core arguments, insightful quotes, and real-time market impact.